ABC and CBS Earnings Climb in 1984 Despite 4th-Quarter Problems

Fueled by higher advertising revenue, the parent companies of the ABC and CBS television networks Tuesday reported increased earnings for 1984. But CBS Inc. had a drop in profits for the fourth quarter because of the sale of its money-losing musical instruments division and losses in its toy division, and American Broadcasting Cos. said its TV network suffered a “modest” profit decline in the last quarter of 1984, in large part because of lower prime-time ratings.

Analysts said that, despite the fourth-quarter problems, the year’s results in broadcasting, coupled with sharply higher profits reported last week by the parent of NBC, demonstrate that 1984 was a strong year for the networks, aided by economic prosperity and special programming such as the Olympic Games.

ABC Profit Up 22%

New York-based ABC said its profit for the full year was up 22.2% to $195.3 million as revenue rose to $3.71 billion from $2.95 billion. But ABC said its fourth-quarter profit rose a modest 5.6% to $52.4 million as quarterly revenue rose 7% to $932.9 million.

The company said fourth-quarter profits of its broadcasting unit--about $108.8 million--were up only slightly from a year earlier, mainly because its television network showed a “modest” decline, which it didn’t specify.

But its broadcast profits for the year rose 17% to a record $427.8 million. Broadcast revenue was up 26% to a record $3.3 billion for all of 1984.

The company said the TV network’s profit drop in the fourth quarter was “moderated by reduced cost growth, which partially offset lower audience levels in prime time.”

ABC said its owned-and-operated television stations reported record profits and revenue, as did its radio network. Its publishing unit was up 13% for the year, while the loss reported by its video enterprises business declined by $2.8 million to $44.6 million, ABC said.

Sold Musical Instrument Unit

CBS, also based in New York, said its profit fell 53.3% in the fourth quarter to $36.1 million from $77.3 million a year earlier, largely because of costs associated with discontinuing the company’s Fullerton-based musical instruments business. Quarterly revenue fell 16% to $66 million.

The company reported a loss of $29 million for the quarter and $43.1 million for the year on disposal of discontinued operations, primarily the musical instruments business. The division, which was purchased last month by an investor group, has suffered from import competition in recent years.

For the full year, CBS said its profit rose 13.5% to $212.4 million from $187.2 million in 1983. Revenue rose to $4.92 billion in 1984 from $4.4 billion a year earlier, the company said.

CBS said its broadcast group’s profits increased 40% to $408.6 million on a 14% increase in revenue, to $2.72 billion, during 1984, thanks to an “outstanding” performance by its TV network. In the fourth quarter, broadcast profits rose 15% to $132.5 million as revenue increased 8% to $838.9 million.

The company said profits of its record group were up 13% last year as its revenue jumped 9%. CBS Publishing had a 7% rise in profits for 1984, although fourth-quarter results were down slightly.

In addition, CBS reported an operating loss of $48.9 million for the fourth quarter and $82 million for all of 1984 on other operations, compared to losses of $9.5 million and $38 million, respectively, a year before.

The company said the major factor in that loss was its toys division. Its domestic results were hurt by higher production and marketing costs and unspecified “inventory problems.” The division’s international results were affected by a substantial write-off for the termination of international distribution of a major line of video-game products, CBS said.

The company also said its theatrical films and software businesses suffered losses in 1984.

Last week, New York-based RCA Corp., in reporting its own improved corporate profits for 1984, said operating profits of its National Broadcasting Co. unit were $218 million last year, up about 40% from the previous year, thanks in part to the TV network’s ratings improvement. NBC has moved past ABC to the No. 2 position in the national prime-time ratings so far this season. CBS remains No. 1.

“1984 was a very good year for all three networks,” said Robert B. Ladd, an analyst who follows the broadcasting business for Duff & Phelps Inc., a Chicago investment firm. He attributed the gains in part to increased advertising revenue generated by the Olympics and election-year coverage.

Mark Riely, an analyst with the Wall Street investment firm of F. Eberstadt & Co., said ABC was able to offset the effect of its lower network ratings in the fourth quarter through “a fair degree of cost control.”